Member Sign In

You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating indiv idual securities.

If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.

Buoyed by impressive second-quarter 2012 results and strategies undertaken to reposition itself in an economy that still lacks luster, we have adopted a bullish stance on OfficeMax Inc. . We upgrade our recommendation to Outperform from Neutral with a target price of $9.00.

OfficeMax provides office supplies and paper, print and document services, technology products and solutions as well as office furniture to business firms, government organizations and other retail consumers.

Healthy Bottom Line Result

Amidst a tough economic environment, OfficeMax posted better-than-expected second-quarter 2012 results. The quarterly earnings of 12 cents a share surpassed the Zacks Consensus Estimate by 5 cents and rose substantially from 7 cents earned in the prior-year quarter, on the back of effective cost management. The company also reinitiated its quarterly dividend of 2 cents a share after suspending it three and a half years ago.

However, total sales dropped 2.7% to $1,602.4 million year over year, and also fell short of the Zacks Consensus Estimate of $1,638 million.

The office supplies retailer now expects third quarter sales to remain even with or marginally higher than the prior-year period, including the adverse impact of foreign currency translation. Sales for fiscal 2012 are projected to be flat with the prior year, including the negative impact of foreign currency translation and excluding the extra week in 2011, which resulted in incremental sales of about $86 million.

Company’s Strategies to Stay Afloat

As the recovery in the economy still remains sluggish, consumers and small businesses remain frugal about big-ticket spending like business machines and other durables. Therefore, we believe that the demand for office products is closely tied to the health of the economy.

Consequently, OfficeMax is repositioning itself to stay afloat amidst a difficult consumer environment. The company is containing costs, closing underperforming stores and focusing on innovative products and services, which should all contribute to margin improvements. Further, the company anticipates regaining operating margins of over 3.8% by 2015.

Additionally, the company focuses on optimal store sites in order to boost store productivity. Moreover, OfficeMax is committed to improve sales per square foot by increasing customer traffic and converting them into potential buyers by targeted advertising, ongoing sales training and customer-oriented initiatives. The company has initiated control center technology services to assist customers with PC maintenance or removal of viruses.

As part of its strategic retail partnership initiative, OfficeMax commenced a pilot program with RadioShack Corporation in January 2012, under which the employees of the latter are selling mobile products and accessories and offering services in some of OfficeMax stores in San Francisco.

On the other hand, RadioShack is helping OfficeMax to enhance its consumer electronics offering. The initiative is assisting in driving traffic as well as optimizing selling space utilization.

Let’s Conclude

Genuine efforts are being implemented to combat the tough economy. Business budget remains tight, consumers remain cautious than ever before and companies are trying hard to navigate through the challenging maze.

In an effort to provide topnotch shopping experience to its customers, Dick’s Sporting Goods Inc. (DKS - Free Report) recently publicized the introduction of a new mobile application for iPhones and Android Smartphones.

The new mobile app will offer several benefits to the users and will enable them to enjoy the entire benefits of Scorecard Rewards Program. By using Dick’s mobile app, consumers can locate the company’s stores in any particular area and can also buy goods straight away using the mobile application. Moreover, users will be rewarded 50 bonus points for downloading and getting indulged in the Dick's Sporting Goods brand on social media.

Retailers have shifted their focus on buyers’ needs to generate growth opportunities that will augment sales. The companies are betting high on technological advancements to beat competition and safeguard themselves from adverse economic conditions, which includes the use of e-commerce and m-commerce. These strategies enable the companies to generate additional revenues and broaden their existing customer base.

Dick’s remains confident on the launch of the mobile application, believing that it will provide a better service to its customers and will augment the company’s sales. Moreover, we believe that the new mobile app is extremely handy for the company to enhance its relationship with clients by attracting and retaining customers as well as promoting its offerings.

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leon Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at https://at.zacks.com/?id=5518.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Resources

Client Support

Follow Us

Zacks Moblie App

Zacks Research is Reported On:

Yahoo

MSN

Marketwatch

Nasdaq

Forbes

Investors.com

Morningstar

Copyright 2018 Zacks Investment Research

At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25% per year. These returns cover a period from 1988-2017. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zack Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

Visit performance for information about the performance numbers displayed above.